Archive for February, 2013

Columbia Residents Have Some of the Lowest Average Credit Scores in the US

A bad credit score can have a serious negative impact on many aspects of your life. Unfortunately, many residents in South Carolina are struggling with bad credit. In fact, according to a recent article published in USA Today, Columbia, South Carolina, is one of the metro areas with the worst average credit scores in the entire United States.

Our Columbia, SC bankruptcy attorneys are concerned to hear that so many people in the area are coping with bad credit. We urge residents to understand the steps that they can take in order to begin improving their credit. We also want to ensure that residents understand that bankruptcy can sometimes be the first step in rebuilding your credit, despite what you often hear about bankruptcy being a credit killer.

Columbia, SC Residents Struggle with Low Credit Scores

USA Today published an article on February 7, 2013 that discussed the results of a report recently released by TransUnion. TransUnion is one of the three major credit reporting bureaus in the United States (along with Equifax and Experian). The TransUnion report listed average credit scores for people in different parts of the United States, so it was easy to see where people were faring the worst as far as their credit scores.

According to their list, Columbia, South Carolina, was one of the worst metro areas, with an average credit score for residents of only 650. Areas that did worse included Memphis, Tennessee, with an average credit score for residents of 638; Jackson Mississippi with an average score of 642; El Paso with the same average score of 650; and a city each in Texas and Arkansas. Las Vegas-Paradise also tied with an average score of 650.

Credit scores are determined by several key factors including your payment history; the amount of credit that you have available to you that you’ve used; the age of your credit cards; the type of debt you have and the amount of new debt you’ve recently tried to take on. A bad credit score – including below the 650 range – can result in higher interest rates and a denial of loans in certain cases. Auto insurers, employers and landlords also look at your credit score and a bad score can hurt you there as well.

Can Bankruptcy Help You Rebuild Your Credit?

For those with low credit scores who are struggling, rebuilding your credit usually centers around paying down debt, making payments on time and waiting for negative information to drop off of your credit report. In some cases, however, if you are drowning in debt then the single best thing you can do is to file bankruptcy.

This may come as a surprise to some because you may have heard that bankruptcy is bad for your credit. It is, of course. However, so is getting month after month of negatives posted on your report if you can’t pay your bills. Bankruptcy can allow you to stop the negative data by eradicating your debt or getting you onto a payment plan. Once this happens, you can start to rebuild your credit. For certain people, therefore, who can’t pay their bills and who continue to have their credit scores go down as a result, bankruptcy can be the first step in the road to recovery.

If you are considering bankruptcy, contact the Columbia, South Carolina attorneys at Matthews & Megna today at 877-253-7705.

Foreclosures Down in SC: Can Bankruptcy Save Your Home?

According to GSA Business, the number of foreclosures in South Carolina was down 24 percent in January 2013 as compared with January 2012. This is good news for many homeowners, although South Carolina is still not doing quite as well as the nation as a whole, since the national average number of foreclosures decreased 28.5 percent in January 2013 compared with the same month in 2012.

Unfortunately, there are still plenty of homeowners in the state who continue to struggle. If you are one of them, it is important to understand that filing for bankruptcy protection may be able to help you to save your home. Our Columbia, SC bankruptcy attorneys can help you to understand when and if bankruptcy is a viable option for you in the fight against foreclosure. 

Bankruptcy And Your Mortgage 

When you file for bankruptcy, the bankruptcy is NOT going to help you to save your house by eliminating your mortgage debt. In fact, if you want to keep your home, you are going to have to keep paying on your mortgage whether you file for a chapter 7 bankruptcy or a chapter 13 bankruptcy.

However, there is a limited exception to this rule for people with certain second mortgages, third mortgages and other non-primary mortgages. If you have a second mortgage or other non-primary mortgage that has no collateral at all, then you may be able to have that mortgage reclassified as unsecured debt in a process called lien stripping. This sounds complicated but isn’t. Basically, what it means is that if your house is worth only enough to pay off the first mortgage, then the second mortgage holder wouldn’t get anything if they foreclosed. They don’t actually have any collateral and the loan isn’t really a secured loan.

If this is the case, then the bankruptcy can reclassify the second mortgage debt as what it actually is: unsecured debt. You could then include it in a chapter 13 repayment plan along with other unsecured debt like credit card debt. You would make monthly payments over time for a period of 3-5 years as determined by the repayment plan created in your bankruptcy and any balance left on your debt would be forgiven.

What if Lien Stripping Doesn’t Apply, Can Bankruptcy Help?

Lien stripping isn’t an option for a lot of residents struggling with foreclosure but this doesn’t mean that bankruptcy can’t help you. When you file for bankruptcy, an automatic stay goes into effect. This stops collection efforts that may be proceeding against you. In other words, the bank can’t proceed toward foreclosing on you. While they eventually can if you don’t get current and start paying, bankruptcy slows the process down and takes time. During this time, you may be able to negotiate a loan modification.

Filing for bankruptcy can also help to eliminate your other non-mortgage debts (under chapter 7) or to make those debts more affordable (under chapter 13). As such, in some circumstances you may be able to fix your other debt problems so your mortgage becomes more affordable and you can keep your house.

If you are considering bankruptcy, contact the Columbia, South Carolina attorneys at Matthews & Megna today at 877-253-7705.

Bill to Make Student Loan Debt Bankruptable Will be a Tough Fight

Currently, there are certain types of debt that you can resolve through bankruptcy and certain types of debt that you cannot. One type of debt that is typically not dischargeable nor negotiable in a bankruptcy proceeding is student loan debt. Student loan debt is a massive burden for many young people, and the fact that it is almost impossible to eliminate in bankruptcy is a growing problem.

Lawmakers are currently trying to tackle the issue with the Fairness for Struggling Students Act of 2013. According to Barrons, this Act faces a tough fight due to widespread opposition. Further, similar laws have not been able to pass. Still, our Columbia, SC bankruptcy lawyers will be closely watching the debates surrounding this law: If it passes it would have a major impact on relieving one of the most crippling forms of debt that young people face.

The Bill to Make Student Loan Debt Bankruptable

The Fairness for Struggling Student Act of 2013 has been proposed by Senate Democrats and addresses only certain types of private loans. Government loans would still not be able to be discharged or changed in a bankruptcy proceeding. The change, however, could still make a big difference even though many students do have government loans.

Private student loans tend to have higher rates than government loans, which makes them more burdensome to a student who is struggling with debt. Private student loans also cannot be consolidated with government loans, so students may find it difficult or impossible to refinance and/or lock in rates on these loans. Furthermore, government loans often offer a variety of repayment options that can make them more affordable, including payment programs tied to income that allow the remaining balance of debt to be discharged after 25 years of making payments. Private loans may not offer the same level of flexibility in repayment and may not be as generous as far as deferment, forbearance or loan forgiveness.

All-in-all, private loans, therefore, add up to be a bigger problem for many young people who are facing debt troubles than do government loans. Making these private loans dischargeable in bankruptcy, therefore, could free some students who may spend a lifetime struggling to pay loans that they can never eliminate.

Of course, there are some important counterarguments, including the fact that it could hurt the student loan market if the bill passes by significantly reducing the availability of private loans. However, it is clear that something needs to be done for all of the students who face such debt.

Can You Ever Discharge Student Loans in Bankruptcy?

Since the bill may not pass, students may be concerned about when – if ever- you can discharge student loans in bankruptcy. The answer is that you can discharge some student loans under very rare circumstances if you can prove an undue burden.

Usually, this applies only in limited situations such as when you have become completely and permanently unable to work in a way that would allow you to repay the loan (like if you became permanently disabled). If you have any possible hope of being able to make an argument for the discharge of your student loan debt, you will need to work with a qualified bankruptcy attorney who can help you to build a very compelling case for the court. For others who face high student loan debt, filing for bankruptcy can discharge other financial obligations, which can then allow you to focus on reducing your student-debt burden.

If you are considering bankruptcy, contact the Columbia, South Carolina attorneys at Matthews & Megna today at 877-253-7705.

South Carolina Ranks 48th Among States in Financial Security

According to a February 4th article in The Post and Courier, the Corporation for Enterprise Development’s new study has indicated that South Carolina residents are in dire financial straits. In fact, the study considered a variety of economic indicators that attest to a state’s financial stability and found that South Carolina ranked 48th out of 50 states in terms of the financially security of its residents. 

Our Columbia, SC bankruptcy attorneys are concerned that so many South Carolina families are in danger of financial disaster or are already coping with financial calamities. We encourage families who are struggling with a debt burden that is unsustainable to explore all of their options including bankruptcy.

South Carolina Residents are Struggling

According to the Post and Courier, the Corporation for Economic Development indicated that almost half of all residents of the state of South Carolina were living on the brink of financial disaster. Approximately 47 percent of those living in the state have little money saved or have no money saved at all.

Other key factors that impact the perilous financial state for many South Carolina residents included wages that are lower than average; low levels of educational attainment; and an unemployment rate that is higher than average.

There was some limited good news, including the fact that college grads in the state tended to have a lower default rate than other areas in the U.S. and  the state’s high rate of homeownership amid an affordable housing market. However, this news is little comfort to a family that has no savings and that is facing a debt or financial crisis.

What to Do If You Are Struggling

If you have no savings and you lose your job or end up needing to come up with cash for necessities like home repairs or car repairs, it is important to try to stay away from payday loans and car title loans that can have very high interest rates. When possible, pursue more conventional options like bank loans to avoid becoming trapped in a debt cycle you cannot repay.If you already are struggling with debt that has reached unacceptable levels, then bankruptcy might be the answer. Bankruptcy can be preferable to throwing good money away paying interest on a debt that you’ll never get paid down.

Filing for bankruptcy is also a far better solution than cashing in any type of retirement account or borrowing against the equity of your home to try to dig your way out of debt. Your home equity and most types of retirement savings are protected by bankruptcy laws so that you can address your debt problem and fix your financial situation without affecting these very important sources of financial security.

So, if you are in a situation where your debt has become so bad that you truly don’t think you can pay it, you  should not hesitate to get the process of bankruptcy started so you can begin to get back on track.

If you are considering bankruptcy, contact the Columbia, South Carolina attorneys at Matthews & Megna today at 877-253-7705.